It's tough to argue with the third-quarter results released last night by Boston Beer (NYSE:SAM). As the largest brewer of craft beers, its growth is impressive -- and a bit surprising.

The year-over-year comparisons for the income statement, balance sheet, and cash flow statement can be found in our Fool by Numbers published earlier today. The results show a pretty strong quarter across the board. If there's one area for concern, it's in the company's gross margin performance, where it lost 1.82 percentage points vs. last year.

But the company really cleaned up this quarter, and so far this year, in sales volume. On a barrels sold basis, the company has been steadily increasing its sales in most years, and gradually increasing price as well, although apparently not quickly enough to make up for packaging cost increases. These increases in volume and price are allowing the company to gain the operating leverage seen at other brewers, such as Motley Fool Inside Value selection Anheuser-Busch (NYSE:BUD).

Year

Barrels Sold

Net Revenue/Barrel

TTM

1562

177

2005

1358

175

2004

1267

171

2003

1236

168

2002

1286

167

2001

1165

160
Source: Boston Beer 10-K and press release

Over the years, a part of Boston Beer's model has been to pay for the use of manufacturing capacity at other brewers. One of its larger deals has been with SABMiller, and it's set to expire in 2008. To ensure it can replace this capacity and have some room for expansion, Boston Beer has been looking to build its own facility. Compared to the company's normal capital expenditures, this will bring a year or two of much higher spending, and there's always the possibility for a hiccup during the switchover.

Last quarter, after the company reported earnings, I did a quick discounted cash flow analysis and found that approximately 7% to 8% growth in free cash flow is priced into the shares for a decade. Given the company's increased needs for capital expenditures in the near future, and the debt costs that come along with those costs, that seems achievable. But I think higher growth rates are unlikely, and overall, that makes the shares fairly priced in my eyes.

Anheuser-Busch is an Inside Value pick. Take the newsletter for a 30-day free trial.

At the time of publication, Nathan Parmelee had no financial interest in any of the companies mentioned. The Motley Fool has an ironclad disclosure policy.